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The Emergence of Open Payment Fare Systems

The Emergence of Open Payment Fare Systems. Traditional, Card-Based, Transit Agency-Issued Approach. Sponsored by the ITS Professional Capacity Building Program, ITS Joint Program Office, Research and Innovative Technology Administration, U.S. Department of Transportation.

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The Emergence of Open Payment Fare Systems

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  1. The Emergence of Open Payment Fare Systems Traditional, Card-Based, Transit Agency-Issued Approach Sponsored by the ITS Professional Capacity Building Program, ITS Joint Program Office, Research and Innovative Technology Administration, U.S. Department of Transportation

  2. Why Transit Needed Contactless Smart Cards • Transit Use Case Required Contactless • High speed, high volume • Convenient and flexible for consumers • Transit Agencies gained efficiencies • Shrinkage/fraud prevention • Data capture and analysis • Enhanced customer experience

  3. The Traditional Smart Card Fare Collection System • Cards issued and managed by transit agency (i.e. closed system) • Used for transit service only (and certain concessions) • Customers pre-pay for transit products • Electronic purse on card • Early deployments were AFC enhancements • This was the only approach at the outset of smart card-based systems • Financial payment smart cards were contact cards

  4. Sample System Architecture Data Flows Regional Central System Transit Agency Central Computer Local Data Processors Devices

  5. Data Flows • Transaction data flows up through the system to the central computer (regional or single operator) • Transaction location, time, and amount • Transit card type, number, etc. • Health and welfare data • Data flows down through the system to the readers • Fare information updates • Revisions, patches, etc. • Autoload information, updates to card bad lists, etc.

  6. Smart Card Systems Led to Innovations • Regional coordination (in Seattle, Bay area, Washington) targeted key benefits: • Single card for multiple transit services • Enhanced customer experience • Cost sharing • Enhanced institutional programs (Universities, Transit benefits automation, Visitor Passes, etc.) • Early multi-modal payment programs (WMATA parking)

  7. Traditional Approach Strengths • Proven and Reliable • Addresses agency need to increase operational efficiencies • Gives customers more convenience and flexibility • Multiple avenues for top-up/purchase of fare products • Ability to pay for transit and park n’ ride with same card (WMATA) • Has the “magic” factor with customers • Represents a generational leap from magnetic technology

  8. Traditional Approach Limitations • Industry-specific system integrators and vendors • Proprietary technology limits competition and truly open procurements • Standards development viewed as a “silver bullet” • However, still not fully standardized • Security • Front-end devices • Closed system limits partnering, particularly among transportation modes

  9. Standards – A Slow Evolution Tomorrow?? Payment App augmentation to national standards and ISO 24014 Mobile App Standards? Today Financial Payments Industry standards- reader, security, business rules National AFC Standards- implementations limited ISO 24014- High-level Architecture and Use Cases Only ISO 14443- did not achieve promise anticipated 2001

  10. Why are Standards so Vital? • Enhance competition • Improve freedom to evolve system, partner, and develop applications (within a transport mode) • Move to open architecture • Aid migration from specialized hardware and software to COTS • Facilitate Interoperability • Cost constraint is a key misconception • Standards may reduce costs in the long run due to competition • In short term, costs often increase due to new development

  11. Traditional Approach leads to Open Approach • Several factors have led to financial payments industry involvement in transit • Solid advocacy for contactless interface by transit industry • Idea that fare collection is not a transit agency core competency • Active pursuit of pilots for co-branded payment card/transit card • Development by transit industry of standards for traditional systems • CFMS- American Public Transportation Association supported by US Federal Transit Administration and Federal Highway Administration • Unique regional approaches • Presto- Program lead by Ontario Ministry of Transportation and transit providers and based on OIS to achieve regional integration. • Development roadmap embraces open payments, mobile/NFC

  12. The Future of Fare Systems • The trend toward open payment systems is clear • One roll-out (UTA in Salt Lake City) and one major pilot in it’s third phase (NYC-New Jersey metro region) • Current RFPs from transit operators of all sizes are requiring open payments solutions to some degree • Perception exists that open payment systems are the next generational leap • Non-transit industry vendors and integrators are emerging • Where does this place the traditional approach?

  13. Unique Regional Solutions • Operators must evaluate their unique circumstances • Legacy traditional smart card payment systems with remaining life • Single-agency or multi-agency • Political environment • Trend toward leasing systems to private sector entities throughout transportation • Migration paths will vary based on these factors • Potential for hybrid systems utilizing multiple payment methods to leverage strengths of different approaches

  14. Open Payment Systems- Crossing the Chasm Issues to be addressed include: • Prove system reliability • Prove ability to handle all fare types, transit modes, and address issues such as proof of payment • Show cost effectiveness versus traditional method • Need widespread availability of contactless payment cards • Need further education between financial payment industry and transportation industry Source: Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, Geoffrey A. Moore

  15. Additional Innovations On the Horizon • Mobile payment applications- pilots galore • Mobile application has its own chasm-crossing issues! • Will open payment application emerge? • Acceptance of PIV credentials and other PIV-compliant credentials being piloted • Open payment application on PIV credentials under examination by DoD • Open payment approach could be key to multi-modal payment approaches (transit, parking, tolling, HOT/HOV, demand pricing, etc.) • All modes can leverage a solution that is not mode-specific

  16. Thank You for Your Attention! Tim Weisenberger US DOT John A. Volpe National Transportation Systems Center timothy.weisenberger@dot.gov

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